Jim's answer probably derives from a line in the 1956 classic movie The Court Jester: Danny Kaye, playing the hapless jester, is told to go into the castle and find Griselda; he replies, "Gri-WHOO-lda?"
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H Stephen StraightApr 30 '13 at 21:44

3 Answers
3

The fourth volume of the Dictionary of American Regional English fortifies Munch's final point with evidence that a jocular Americanized rendition of Scandinavian as “Scandihoovian” – alternately Scandahoovian, Scandihuvian, Scandinoovian, and Skandihoovian – was circulating as early as 1901, particularly in association with Norwegian and Swedish loggers in the Upper Midwest and Pacific Northwest.

Based on this, I suspect that the term imitates the Scandinavian-American accent heard in those regions (e.g., as spoken in Fargo).

Background

Scandihoovian dates from the late 19th century after hundreds of thousands of people emigrated to North America from Scandinavia and the Nordic countries. Many settled in the north and applied their logging expertise from their forested homelands. According to the US Library of Congress:

It was in the 19th century, however, that the great migration of Scandinavians to the U.S. took place. The once-prosperous Scandinavian nations were rocked by political strife and social upheaval as regional wars and agricultural disasters created tremendous instability in everyday life. Meanwhile, official corruption, the policies of powerful state churches, and an increasing disparity between the rich and the poor drove many thousands of Scandinavians to seek a better life elsewhere. By the middle of the century, the time was ripe for mass immigration, and Scandinavians began arriving in American ports in large numbers.

Each group of immigrants-those from Sweden, from Norway, from Denmark, Finland, and Iceland-would take a different path to life in the United States.

Early uses

The Oxford English Dictionary says it's chiefly North American slang and an arbitrary jocular alteration of Scandinavian. Their earliest citation is 1929:

1929 F. C. Bowen Sea Slang 117 Scandihoovian, any Scandinavian; used as an alternative to Scandiwegan or Scowegian, but generally in mild contempt.

The Dictionary of American Regional English says it was circulating as early as 1901, but I've found some antedatings.

The earliest example I found refers to tobacco, in a description of "Enjoyment in a Lumber Camp" in Michigan and Wisconsin towards Lake Superior ("by Bill Nye, in Denver Opinion"), published in The Iola Register (May 23, 1884, Iola, Kan.):

The tobacco used by the pine-choppers of the northern forest is called the Scandihoovian. I do not know why they call it that unless it is because you can smoke it in Wisconsin and smell it in Scandihoovia.

The earliest I found referring to a person is in testimony in court reports regarding a charge of assault with intent to murder. First the The Deseret Evening News (Sep 10, 1889, Salt Lake City, Utah):

[Fred] Laehr came up, and [W.T.] Holland slapped him on the shoulder, "Hello, you d————— scandihoovian;" Laehr objected to be called that name; he had had something to drink; Holland repeatd his remark, and some words followed;

[...]

Holland came in and spoke to me; he then turned to Laehr and said "What are you? a Skandihoovian or a gentleman?"

It was similarly reported in The Salt Lake Herald (September 11, 1889, Salt Lake City, Utah) in a report titled "Held For Battery":

Laehr stepped up to Holland, when the latter slapped him on the shoulder, and said: "Hello, you d—d Scandihoovian." Laehr replied, "What, you call me a Scandihoovian!" Holland said, "Yes, and Fritz too."

I don't think Holland was calling Laehr by the nickname "Fritz", but rather he's saying Fritz Riesen (present, and "at whose former place of business the fracas occurred") is also a Scandihoovian. Both Fred Laehr and Fritz Riesen sound like German names and that may have added to the insult: using a disparaging nickname for Scandinavians for people who aren't even Scandinavian.

Jocular ooglification

Finally, World Wide Words mentions Scandinoovian as an example of ooglification:

Anatoly Liberman commented in his Oxford Etymologist blog in July this year that “The vowel sound oo has the ability of giving a word an amusing appearance. Whoever hears snooze, canoodle, and nincompoop begins to smile; add boondoggle to this list.”

Roger Wescott listed a number of slang terms from the past century that share this quality. Most of his examples are either uncommon or defunct. Divine has appeared as divoon, Scandinavian is known as Scandinoovian (sometimes as Scandihoovian), and at one time cigaroot was a well known variation on cigarette...

SCANDIWEGIAN
The general maritime slang name for a man or ship from Norway, Sweden or
Denmark. Sometimes "Scowegian" or "Scandihoovian".
(Naval Terms: HMS Richmond)

Comment on MW:

SCANDIHOOVIAN
1 usu disparaging : a Scandinavian individual esp. living in the U.S.
2 : a Scandinavian language as spoken in the U.S. esp. by rural people
"My family immigrated to America a couple generations ago from various parts of Scandanavia, and frequently uses the word to (humorously) refer to themselves and other people from those countries." … Caitlin Mumm-Cupples · Windward high school
(MW)

Found on the Forums:

… "Scania" is apparently an English translation for Skåne, the southern province of Sweden, but it seems to have expanded in its meaning, perhaps in the same way that "Holland" is strictly speaking a small part of the Netherlands. The "-di" part is perhaps like "-dig" (swedish) or "-dy" (english), to denote an adjective. The "-ian" suffix suggests "in origin". The "weg" part is perhaps "way". I'm not sure what that really means - why is "Norway" called that? "north" + "way" = "the lands up north"? The "hoov" bit is still puzzling. "hov" means court (like "royal residence")... so perhaps that's where it comes from. (Anonymous on tribe.net)

"The tobacco used by the pine choppers of the northern forest is called the Scandihoovian. … can smoke it in Wisconsin and smell it in Scandihoovia."